E.G. Capital Inc.
NEX BOARD : EGC.H

January 27, 2006 19:19 ET

E.G. Capital Inc. Announces Results for the Third Quarter Ended November 30, 2005

BROSSARD, QUEBEC--(CCNMatthews - Jan. 27, 2006) - E.G. Capital Inc. (NEX BOARD:EGC.H), ("E.G. Capital"), formally National Construction Inc., today announces results for the third quarter ended November 30, 2005.

Third Quarter ended November 30, 2005

Revenues decreased by 99.9% from $14.8 million for the three months ended November 30, 2004 to $157,617 for the three months ended November 30, 2005. This decrease was entirely due to the sale of the Plant Maintenance Division in February, 2005. Revenues decreased by 99.9% from $29.3 million for the nine months ended November 30, 2004 to $382,515 for the nine months ended November 30, 2005. This decrease was entirely due to the sale of the Plant Maintenance Division in February, 2005.

For the three months ended November 30, 2005, the Corporation achieved a gross profit of $157,617 representing 100% of total revenue compared to $1.5 million or 10.4% for the three months ended November 30, 2004. This decrease was entirely due to the sale of the Plant Maintenance Division in February, 2005. For the nine months ended November 30, 2005, the Corporation achieved a gross profit of $382,515 representing 100% of total revenue compared to $2.5 million or 8.6% for the nine months ended November 30, 2004. This decrease was entirely due to the sale of the Plant Maintenance Division in February, 2005.

Selling, General and Administrative Expenses were $209,375 for the three months ended November 30, 2005 as compared to $598,296 for the same period last year The reduction is entirely due to the sale of the Plant Maintenance Division in February, 2005. Selling, General and Administrative Expenses were $504,168 for the nine months ended November 30, 2005 as compared to $1.6 million for the same period last year. The reduction is entirely due to the sale of the Plant Maintenance Division in February, 2005.

An earn-out allowance expense of $1,000,000 has been recorded against the total Earn-Out Provision of $1,200,000 as at November 30, 2005 due to the uncertainty of the net realizable value of the earn-out over the remaining term. The earn-out allowance for the three months ended November 30, 2004 was $nil. The earn-out allowance expense for the nine months ended November 30, 2005 was $1,000,000 as compared to $nil for the same period last year.

A CSST receivable allowance expense of $340,000 has been recorded against the CSST receivable as at November 30, 2005 due to the uncertainty of the net realizable value of the gross CSST receivable. The CSST receivable allowance for the three months ended November 30, 2004 was $nil. The CSST receivable allowance for the nine months ended November 30, 2005 was $340,000 as compared to $nil for the same period last year.

The Corporation incurred interest and bank charges of $6,292 for the three months ended November 30, 2005 as compared to interest expense of $50,820 for the same period last year. Interest on the note and loan due to shareholders for the three months ended November 30, 2005 was $Nil as compared to $43,512 for the same period last year. The Corporation incurred interest and bank charges of $26,209 for the nine months ended November 30, 2005 as compared to interest expense of $107,715 for the same period last year. Interest on the note and loan due to shareholders for the nine months ended November 30, 2005 was $Nil as compared to $139,299 for the same period last year.

The Corporation incurred amortization expenses of $26,583 for the three months ended November 30, 2005 as compared to $50,874 for the same period last year. The Corporation incurred amortization expenses of $32,155 for the nine months ended November 30, 2005 as compared to $152,622 for the same period last year.

As a result of the foregoing factors, the loss before income taxes for the three months ended November 30, 2005 was $1,424,633 as compared to income before income taxes of $0.8 million for the same period last year. As a result of the foregoing factors, the loss before income taxes for the nine months ended November 30, 2005 was $1,520,017 as compared to income before income taxes of $0.5 million for the same period last year.

The net loss for the three months ended November 30, 2005 was $1,424,633 after income tax expense of $nil as compared to net income of $0.8 million after income tax expense of $Nil for the same period last year. The net loss for the nine months ended November 30, 2005 was $1,544,703 after income taxes of $24,686 as compared to net income of $537,002 for the same period last year.

About E.G. Capital Inc.

The Corporation is an inactive company listed on the NEX board of the TSX Venture Exchange Inc ("the Exchange"). The business of the Corporation is to identify and evaluate businesses or assets with a view to completing a reactivation transaction on the Exchange. The Corporation's principal activities in the first nine months of the current fiscal year have been the wind-down of remaining current assets and liabilities subsequent to the sale of it's Plant Maintenance Division on February 4, 2004 and preparation for the completion of a private placement which was completed on July 11, 2005.

On July 11, 2005, the Corporation announced that it had completed a private placement of 3,500,000 units at a price of $0.10 per unit (the "Private Placement"). Each unit (the "Units") consists of one common share to be issued on a "flow-through" basis under the Income Tax Act (Canada) and one warrant, with each warrant entitling the holder thereof to purchase one common share also to be issued on a "flow-through" basis under the Income Tax Act (Canada) at a price of $0.10 per share for a period of one year (the "Warrants").

The Corporation intends to use the proceeds of the Private Placement to review and pursue oil and gas acquisitions and farm-in opportunities in the Western Canadian Sedimentary Basin. The Corporation further intends to attempt to unlock the value of its tax pools of approximately $25,000,000. In connection therewith, the Corporation intends to pursue a new management team, including a President, Chief Financial Officer, Vice-President, Exploration and Vice-President, Land, during 2005 and 2006.

The Corporation also cancelled 1,400,000 stock options and granted options to purchase up to 1,882,000 common shares at a price of $0.10 per share to directors and officers.

This press release may contain forward-looking statements relating to E.G Capital. Among the important factors that could cause actual results to differ materially from those indicated by such forward looking statements are competitive pressures, technical difficulties, market acceptance, changes in customer requirements, and general economic conditions, and other risks and uncertainties as described from time to time in E.G. Capital's reports, registration statements and filings filed by E.G. Capital with securities regulatory authorities.

The TSX Venture Exchange Inc. does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • E.G. Capital Inc.
    William G. Edwards
    CFO
    (450) 444-2405 ext 237